On March 9, 2026, the California Court of Appeal handed down a decision in favor of the California Public Utilities Commission’s (CPUC) Net Billing Tariff, which was adopted in 2022 as a successor to the then-current Net Energy Metering (NEM) 2.0 tariff. The Net Billing Tariff reduced compensation for exported energy due to concerns that NEM 2.0 shifted grid costs to ratepayers without solar. 

The Center for Biological Diversity challenged this new tariff, arguing it would slow the growth of rooftop solar, harm disadvantaged communities, and ignore important benefits of local solar power.[1] The Court of Appeal initially upheld the program using an older, highly deferential review standard known as the Greyhound standard.[2] But the California Supreme Court subsequently ruled that courts must use the Yamaha standard[3]—a less deferential standard—when reviewing the CPUC’s interpretation of statutes and remanded the case back to the Court of Appeal.

Applying the Yamaha standard, which follows longstanding principles of statutory construction,[4] the Court of Appeal again upheld the CPUC’s Net Billing Tariff. The court found that the CPUC acted within its authority, reasonably balancing costs and benefits for all customers. Further, the court reasoned that the CPUC did not violate its statutory obligation to facilitate the sustainable growth of solar while also supporting disadvantaged communities.

[1] Ctr. for Biological Diversity, Inc. v. Pub. Utilities Comm’n, No. A167721, 2026 WL 657656 (Cal. Ct. App. Mar. 9, 2026), review granted.

[2] See id. (applying Greyhound to reason: “[the C]ommission’s interpretation of the Public Utilities Code should not be disturbed unless it fails to bear a reasonable relation to statutory purposes and language” (citing Greyhound Lines, Inc. v. Pub. Utilities Comm’n, 68 Cal. 2d 406 (1968))).

[3] Ctr. for Biological Diversity, Inc. v. Pub. Utilities Comm’n, 18 Cal. 5th 293 (2025); Yamaha Corp. of Am. v. State Bd. of Equalization, 19 Cal. 4th 1 (1998).

[4] As the reviewing court with “final responsibility for the interpretation of the law” under which the regulation was adopted, the Court of Appeal must exercise its independent judgment in interpreting the statute and “apply[ing] well-settled principles of construction.” Ctr. for Biological Diversity, 2026 WL 657656, at *6 (citing Yamaha, 19 Cal. 4th at 11, and Cal. Cannabis Coal. v. City of Upland, 3 Cal. 5th 924, 933–34 (2017)).